A seller’s ability to sell their home in today’s real estate market is partially determined by both the supply of homes for sale and the demand. In real estate terms, supply is represented by the current month’s supply of homes for sale (simply put – the number of homes for sale divided by the number of homes sold in the previous month).
While there is no hard and fast rule that will apply to pricing in every category of housing, or individual neighborhoods; here is a great guideline:
A one-to-four months supply typically creates a seller’s market where there are not enough homes to satisfy buyer demand. Appreciation is therefore potentially guaranteed.
A five-to-six months supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
A seven-to-eight months supply shifts the situation back to a buyer’s market wherein the number of homes for sale exceeds the demand.
What is happening across the country and in our areas right now?
In most parts of the country as in Truckee/Tahoe and the Sierra Valley, supply is dropping dramatically. According to the National Association of Realtors total housing inventory is below a five months supply in these areas. This is almost 20% below inventory numbers of just a year ago and at levels we haven’t seen since 2005!
Based on the table above, we can see that the supply/demand proportion is showing a seller’s market where prices are rising. This has created positive movement in housing values in most parts of the country.
Sellers have a great opportunity right now. Historically, inventory increases dramatically as we approach summer. Selling now while demand is high and supply is low may earn you your best price!